21% VAT for transportation services of goods outside the EU

Kevin Treuren

VAT specialist

6 maa. `24

The Tax Authority recently shared a knowledge group position which is relevant to logistic services between two businesses established in the Netherlands. According to this position, Dutch transportation companies must charge 21% VAT for their services related to goods transportation that takes place entirely outside of the EU. In the article below we will talk about the background of the knowledge group position, followed by questions, answers and analysis as elaborated by the Tax Authority.

Background

A logistics service provider based in the Netherlands provides a transportation service to a business located in the Netherlands. The transportation services involve the transportation of goods, taking place entirely outside the EU.

Question

Does the zero VAT rate apply to services related to goods from outside the Netherlands that have not5 been imported, for the transportation of goods between third countries?

Analysis

The zero VAT rate does not apply to the transportation of goods between third countries. It is not possible to have goods from outside the Netherlands that are not imported. According to the Value Added Tax Act 1968 (hereafter: VAT Act 1968), the place of the transportation service is the Netherlands because the recipient is located in the Netherlands. The zero VAT rate applies to the supply of “goods coming from outside the Netherlands” physically brought into the Netherlands but not yet imported upon arrival. “Goods coming from outside the Netherlands” refers to goods brought into the Netherlands from another member state, a third country, or from outside the Union. These are goods that upon arrival in the Netherlands are already under a customs regime or are place under a customs regime upon arrival.

The transportation service, as mentioned under ‘background’, involves the transportation of goods that are not physically located in the Netherlands, thus not meeting the criteria specified in the VAT Act 1968. The Tax Authority finds support in the legislative history in this regard and therefore, 21% VAT applies.

Practice

We understand, in practice, there is (still) a different perspective regarding the Tax Authority’s view. A transportation service in third countries between two businesses established in the Netherlands is taxed at 21% VAT. VAT is indeed a consumption tax and aims to align with actual usage. The actual usage in the mentioned scenario is in the respective third country and not the Netherlands. We believe the Tax Authority’s justification is open to debate.